21Shares, a Zurich-based asset management and investment firm, is urging the European Securities and Markets Authority (ESMA) to introduce clearer guidelines regarding the inclusion of crypto assets in the UCITS (Undertakings for Collective Investment in Transferable Securities) framework.
In a press release published on October 7, the firm pointed out that inconsistencies in regulations across Europe have caused confusion for both retail and institutional investors.
Currently, countries like Germany and Malta permit UCITS funds to include crypto assets, whereas Luxembourg and Ireland do not, leading to a fragmented regulatory environment. This regulatory disparity, according to the asset manager, has created uncertainty for investors, making it harder to understand their options.
In August 2024, the European Fund and Asset Management Association (EFAMA) stated that a review of UCITS-eligible assets was unlikely to include cryptocurrencies, despite previous hopes raised by ESMA’s reassessment in May 2024. The varied interpretations of the regulatory framework across EU countries pose a significant barrier to crypto asset inclusion in UCITS funds.
21Shares stressed that the lack of a unified regulatory approach could lead to gaps in investor protection, as investors might turn to costlier and less professionally managed means to access crypto assets. The firm proposed that ESMA develop consistent guidelines for indirect exposure to crypto across all EU member states to enhance investor protection and improve access to crypto investments.
Mandy Chiu, Head of Financial Product Development at 21Shares, underscored the need for clear rules across Europe to allow broader access to crypto assets, especially for retail investors. Chiu emphasized that a unified regulatory framework would not only protect investors but also promote Europe as a leader in financial innovation. This would foster market stability and support growth in the crypto sector, aligning with Europe’s reputation for encouraging competitive and innovative markets.
This announcement comes shortly after 21Shares US LLC, an affiliate of 21Shares AG, launched the 21Shares Core Ethereum ETF (CETH). Although not registered under the Investment Company Act of 1940, the CETH ETF represents 21Shares’ ongoing commitment to making crypto assets more accessible. Co-founder and President Ophelia Snyder highlighted the firm’s focus on bridging traditional and decentralized finance, noting that the evolving regulatory environment is making it easier to achieve this goal.
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